Tennessee's Haslam: Return gas tax element to transportation proposal

Monday, March 6, 2017

by ERIK SCHELZIG/Associated Press

NASHVILLE, Tenn. — Gov. Bill Haslam is lauding lawmakers for advancing his plan to begin tackling Tennessee's more than $10 billion backlog in road and bridge projects. However, the Republican said Thursday that he hopes to see his bill returned to its original form that includes boosting funding through fuel tax increases.

Haslam told The Associated Press that he doesn't want Tennessee to become the only state in the country to subsidize its road program through revenues raised for the general fund. The governor has argued that while almost all general fund taxes are paid for by Tennesseans, about half of fuel taxes are paid for by out-of-state drivers and trucking companies.

"I've always felt we should pay for roads the way we always have, and the way every other state does: by the people who use those roads," Haslam said. "That practice has served us well for a lot of years and I would hate to see us go away from that."

Haslam's transportation funding bill cleared what was widely considered to be its biggest legislative hurdle last Wednesday when it was narrowly advanced by the House Transportation Subcommittee. But that vote didn't come until after the measure was amended to replace the gas tax portion of the bill with a rival idea to pay for road projects out of sales tax revenues.

Haslam did not appear overly concerned about that change.

"We've said all along this is a long road, I think the road has lots of twists and turns in it," he said. "And you've got the House side and the Senate side, so it's too early to conclude anything about this bill."

Under Haslam's original bill, the state would increase the state's 21.4-cent tax on each gallon of gas by 7 cents and the 18.4-cent tax on diesel by 12 cents. The bill would also increase taxes on cars rented in Tennessee and vehicle registration fees to add nearly $280 million per year in transportation funding.

The governor wants to balance that revenue increase with an equivalent amount of cuts in other areas, including the sales tax on groceries, the tax on earnings from stocks and bonds and corporate taxes paid by large manufacturers.

While Haslam's legislation lives to see another day, there is a growing call among both Democrats and Republicans for the governor to include deeper cuts that will directly benefit middle-class Tennesseans.